Did you know we’re celebrating our 20th Anniversary as the 1st American News Agency exclusively covering the Middle East?

  • The Middle East landscape is changing rapidly.
  • The roads in the region open to new possibilities.
  • The Media Line continues to pave the way to a far greater understanding of the region’s land, people, policies and governments through our trusted, fact-based news.

We’re an independent, ad-free, non-profit news agency and rely on friends like you!

Please make your gift today as we have a most generous matching 2:1 grant.
Thank you!

We paved the way to be the Trusted Mid East News you can rely on!

We’re an independent, ad-free, non-profit news agency and rely on friends like you!

For those observing, may we wish you a healthy, safe, and sweet 5781.

Saudi Arabia’s Aramco Idea and Deal
A billboard displaying an advert for Aramco is pictured in the Saudi capital Riyadh on November 18, 2019. (Fayez Nureldine/AFP via Getty Images)

Saudi Arabia’s Aramco Idea and Deal

Al-Sharq Al-Awsat, London, November 29


At the beginning of 2016, Saudi Crown Prince Mohammed bin Salman, in an interview with The Economist, dropped a bomb: He outlined his plan to put a percentage of the shares of Aramco Oil – Saudi Arabia’s state-owned oil company and the biggest oil producer in the world – on the market as a part of a new plan known as “Vision 2030.” Few voices in the Western world took this pledge seriously. Most economists and political pundits viewed it as a marketing ploy for the new political star. Today, nearly four years later, Aramco’s IPO is expected to be the biggest in history; nearly three times bigger than the previous record set by China’s Alibaba. Even in our region, the idea was not well received at first. In Middle Eastern thinking, it is almost inconceivable to sell stakes in a state-owned oil company. Some viewed it as selling one’s own children. This is because the region has a long history of nationalizations that sought to bring back Arab nations ownership over their rightful resources. Indeed, the Saudi government did not fully acquire Aramco until 1981, after several US companies were obliged to sell their shares. Here in the Middle East, people believe that the state owns the sea, the sky, the soil – and obviously, the oil. Some expressed fear that the Aramco deal would open a window through which foreign colonialism would creep into our region, citing the nationalization of the Suez Canal and the Saudi government’s past conflicts with international oil companies. In the West, lack of enthusiasm stemmed from fears of investing in a state enterprise that is economically inefficient. In addition, many commentators believed that what the Crown Prince said may be doomed to fail because third-world governments are unable to think outside the box. However, in the two years that followed the announcement, the Saudi government ensured that Aramco is fully prepared for its IPO in terms of both transparency and efficiency, which improved the company’s performance and reputation. It opened Aramco, once the world’s most secretive company, to external auditors. The results confirmed that Aramco is a company managed with administrative efficiency and effectiveness similar to other international companies. It proved that its production cost per barrel is only about $2.8; the cheapest cost in the market. What about geopolitical risks? Last September, Iran attacked Aramco’s facilities. The attacks were even worse than the Kuwait oil blaze sparked by Iraqi forces in 1991. However, within a single week, Aramco regained its market share, and in six weeks, it managed to repair damaged facilities and proved it was capable of addressing the most serious of challenges. Now, with all doubts removed from the table, Aramco is ready for its IPO. Saudi Arabia does not have to sell a single share of Aramco, but the idea itself reflects a different approach to state management. This is something that can be easily observed by anyone who visits Saudi Arabia today: it is far more innovative, open-minded, and tolerant than ever before. Since the idea of the Aramco IPO was first presented, Saudi Arabia has come a long way. The kingdom jumped 30 ranks in the world in government administrative reform, according to a World Bank report. It introduced many reforms in the role of government, the private sector, and women’s rights. It opened the country up to tourists and foreign investors. –Abd Al-Rahman Al-Rashed (translated by Asaf Zilberfarb)

Invest in the
Trusted Mideast
News source.
We are on the
front lines.

Personalize Your News
Upgrade your experience by choosing the categories that matter most to you.
Click on the icon to add the category to your Personalize news
Browse Categories and Topics
Wake up to the Trusted Mideast News source Mideast Daily News Email
By subscribing, you agree to The Media Line terms of use and privacy policy.
Wake up to the Trusted Mideast News source Mideast Daily News Email
By subscribing, you agree to The Media Line terms of use and privacy policy.